United States v. Karen Olson

856 F.3d 1216, 2017 WL 2105446, 2017 U.S. App. LEXIS 8525
Court of Appeals for the Ninth Circuit·Decided May 15, 2017·No. 15-30022·Published·Cited by 5 cases

Opinions

Concurrence by Judge HURWITZ

OPINION

FISHER, Circuit Judge:

Karen Olson appeals her conviction for misprision of felony under 18 U.S.C. § 4. She was convicted of concealing and failing to notify authorities of her business partner’s submission of false statements to the United States Department of Agriculture Rural Development Program (USDA) in connection with a federal grant application. She challenges her conviction, arguing the government failed to prove she knew the conduct she concealed constituted a felony. We address her argument in two parts. First, we agree with Olson that, to secure a conviction under 18 U.S.C. § 4, the government must prove not only that the defendant knew the principal engaged in conduct that satisfies the essential elements of the underlying felony, but also that the defendant knew the conduct was a felony. See Flores-Figueroa v. United States, 556 U.S. 646, 652, 129 S.Ct. 1886, 173 L.Ed.2d 853 (2009) (“[Cjourts ordinarily read a phrase in a criminal statute that introduces the elements of a crime with the word ‘knowingly’ as applying that word to each element.”). Second, applying that standard, we hold sufficient evidence supports the jury’s finding that Olson had the requisite knowledge here. We therefore affirm.1

BACKGROUND

The USDA awarded a grant to Robert Wells to open a milk processing facility. The terms of the grant provided that certain equipment was to be purchased wholly or in part with grant funds, and that the USDA would hold a first lien position on any equipment purchased with grant money. Although the grant was in Wells’ name, he had an informal “handshake” partnership with Olson, a former Alaska executive director of the USDA Farm Service Agency who wrote Wells’ grant application. Wells described her as the “brains” behind the grant, and their informal partnership entitled her to 50 percent of the profits from the milk processing facility.

Around the same time, Kyle Beus received a separate USDA grant to establish an ice cream and cheese manufacturing facility. The paperwork for both Wells’ and [1219] Beus’ grant applications warned that anyone who made false, fictitious or fraudulent statements could be fined or imprisoned for up to five years.

Wells, Beus and Olson agreed to locate their two projects at the same facility. Unbeknownst to Wells and Olson, Beus instructed his contractor, Nether Industries, to inflate the value of certain dairy processing equipment—including a clean-in-place (CIP) system and a glycol chilling system—on papers submitted to the USDA for reimbursement. Beus also submitted invoices to Nether, allegedly for project expenses, so he could personally receive a portion of the grant money the USDA disbursed.

A year into the enterprise, Beus told Wells and Olson he had leased certain “technologically obsolete” pieces of equipment rather than purchase new equipment as agreed in the original grant application, including a “really cheap old glycol unit” and an “incomplete clean-in-place system.” As to some of this equipment, Olson informed the USDA there had been a change of plans that called for “leasing instead of outright purchasing some of the original smaller equipment.” She did not do so, however, with respect to the CIP system and glycol cooling system. The attached “Proposed Money Grant Expenditure” included a CIP system listed at $35,000 and a glycol cooling system listed at $50,000 when, in fact, those systems had been leased rather than purchased.

After the USDA disbursed the grant funds, Olson filed a final report with the department. It included a “Final List of Expenditures by Category and Completion” that once again falsely listed the purchase of a $35,000 CIP system and a $50,000 glycol cooling system.

Olson later became aware that Beus had been misappropriating grant funds by submitting false invoices to Nether Industries and receiving payments—which Olson described as “kickbacks”—in return. Olson also discovered Beus had improperly used grant funds to make a $71,000 personal investment in a milk jug manufacturer. An entry in her day planner around this time reveals that she knew Beus’ actions were improper. She wrote: “Began full-time work on financials/straightening out Kyle’s mess. Learning of questionable deals— Nether—Kyle spent $190,000 of our grant on others, so Nether way over budget. Also, Kyle misused our [ ] advance $ as his own stock purchases—!” Olson told the project’s office assistant she “could send [Beus’] ass to jail.” She wrote members of her board that “[t]he revelations of the past week have crystallized for me that [Beus’ agreement to co-locate the projects] was simply a way to divert our grant money into a grandiose plan that has not worked,” and that Beus “has put the entire dairy industry at risk for an ever-widening investigation closing off all loan sources and public goodwill.”

Olson was convicted after a jury trial of misprision of felony under 18 U.S.C. § 4. Her conviction was based on her knowledge that Beus, the principal, submitted false statements to the USDA in furtherance of his scheme to misappropriate grant funds in violation of 18 U.S.C. § 1014—a felony under federal law. Olson appeals.

STANDARD OF REVIEW

‘We review a question of statutory construction de novo.” United States v. Weitzenhoff, 35 F.3d 1275, 1283 (9th Cir. 1993). “Our review of the constitutional sufficiency of evidence to support a criminal conviction is governed by Jackson v. Virginia, which requires a court of appeals to determine whether, ‘after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.’ ” Unit[1220] ed States v. Nevils, 598 F.3d 1158, 1163-64 (9th Cir. 2010) (en banc) (quoting Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979)) (citation omitted).

DISCUSSION

I

The misprision of felony statute states:
Whoever, having knowledge of the actual commission of a felony cognizable by a court of the United States, conceals and does not as soon as possible make known the same to some judge or other person in civil or military authority under the United States, shall be fined under this title or imprisoned not more than three years, or both.

18 U.S.C. § 4 (emphasis added).

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United States v. Karen Olson, 856 F.3d 1216, 2017 WL 2105446, 2017 U.S. App. LEXIS 8525 (9th Cir. 2017).

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